Last updated: February 1, 2012 5:29 pm

Hirai to take the reins at Sony in April

Sony says Kazuo Hirai, its 51-year-old deputy president, will take over as president and chief executive in April, confirming a widely anticipated change of leadership at the Japanese electronics and entertainment group.

Mr Hirai will take on most of the responsibilities currently held by Sir Howard Stringer, the Welsh-born American who has been Sony’s chief executive since 2005 and will stay on as chairman. The news comes on the eve of what are expected to be grim results for a year that included hacker attacks on Sony’s PlayStation game network and supply disruptions from Japan’s earthquake and floods in Thailand.

Sir Howard, who had promoted Mr Hirai at Sony’s video game business then groomed him as his successor, described him in a message to staff as “a convergence executive” who could unite Sony’s divisions and had helped put it back on a path to profitability.

The change had been in the works since March last year when Sony named Mr Hirai executive deputy to Sir Howard and put him in charge of the company’s struggling consumer electronics business. Since then, in the face of internal and external challenges, he has restructured the company’s chronically unprofitable television-making operation.

Sony, which reports third-quarter earnings on Thursday, warned in November it would suffer its fourth straight net loss in the financial year ending in March. Its share price fell by 54 per cent last year and Moody’s cut its credit rating in January.

Mr Hirai’s elevation could accelerate a strategic shift at Sony that has seen it place more emphasis on digital content and networks instead of standalone devices. The transition has been championed by Sir Howard but resisted by some older, more engineering-focused executives, and analysts say it remains only partially complete.

Mr Hirai was part of a quartet of relatively young executives promoted by Sir Howard in 2009 and dubbed the “four musketeers”. In a statement, Sir Howard praised him as “a globally focused executive for whom technology and the cloud are familiar territory, content is highly valued, and digital transformation is second nature”.

Another “musketeer”, Hiroshi Yoshioka, is to take charge of Sony’s small medical devices division – a move likely to be seen as confirming Sony’s intent to expand the business by pursuing a stake in Olympus, the scandal-hit manufacturer of surgical endoscopes.

Olympus, which is short of capital and hurting from revelations that it hid losses on speculative investments dating back decades, is looking to sell shares to one or more strategic investors.

Sony is understood to have approached the company, as have at least two other bidders: Terumo, a specialist medical equipment group, and Fujifilm, the optical devices maker. So far only Fujifilm has publicly acknowledged its interest.

As for Sony’s more established businesses, it will be up to Mr Hirai to steer the company out of what has been an unprofitable middle-ground in the modern global tech sector. Sony, analysts say, is stuck between nimble, innovative US groups such as Apple – which have a firmer grasp of the internet and product design but outsource actual manufacturing – and low-cost South Korean and Taiwanese hardware makers.

Other Japanese consumer electronics companies are also facing problems. Sharp said on Wednesday it was expecting the worst full-year net loss in its 100-year history, of Y290bn ($3.8bn), as a result of falling TV prices, a strong yen, restructuring charges and an adverse one-time tax adjustment.

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